B.C. could do ‘much more’ with carbon tax offsets
B.C. has an advantage over most other jurisdictions in that the overwhelming source of the province’s electricity is carbon-free hydro power.
But there’s a catch: B.C. is also the only jurisdiction with a carbon tax that doesn’t also offer exporters in mining, energy and forestry — known as emissions-intensive trade-exposed (EITE) producers — some sort of scheme to offset that tax, Greg D’Avignon, president and CEO of the Business Council of B.C., said Tuesday.
It means B.C. producers face higher costs than out-of-province and international competitors.
“The rest of the world aspires to do what B.C. accomplished in the 1950s to the 1980s with renewable hydro and low-carbon-content electricity and energy supplies,” D’Avignon said. “B.C., at 97 per cent clean electricity, is the envy of the world.”
But the rest of the world helps shield its high-emissions exporters from the full effect of carbon taxes, he added.
The business council began working on a plan to take advantage of the province’s low-carbon advantage two years ago, consulting with the provincial government and 50 experts from leading industries, infrastructure projects and other groups.
Details were released Tuesday. “While we’ve worked together very collaboratively (during COVID-19) on managing our health outcomes and our personal health, we now need that same kind of collaboration to rebuild our economy,” D’Avignon said.
He said the business council isn’t asking for the carbon tax to be eliminated, but that without protection for EITE exporters the province’s low-carbon advantage disappears and you wind up with carbon leakage: Commodities are supplied from elsewhere, to the detriment of the B.C. economy, but also, because greenhouse gases don’t recognize borders, to the detriment of the climate, air, water, forests and crops.
“Government and business verified together, using third-party professionals ... as well as the most sophisticated data available, and we agreed that on average B.C.’s energy commodities that we sell to the world are half the climate-causing (greenhouse gas) intensity compared to our competition,” D’Avignon said. That works out to millions of tonnes fewer GHG emissions than competing jurisdictions, he said.
“But we could be doing so much more if we had the ability to sell more to the world,” D’Avignon said.
Geography is one stumbling block. But it’s mostly policy, regulations and taxes that make B.C. a high-cost jurisdiction, D’Avignon said. On average, B.C. resource companies are 11 to 87 per cent less competitive on return on investments and operations, and/or on new projects.
The plan calls for assistance for the province’s mining, forestry, natural gas and other EITE producers through:
Making regulations less cumbersome and complex;
Developing a specific strategy that makes clear the province welcomes investment;
Protection from paying the full carbon tax, such as the federal output-based pricing system; and
Offering carbon offsets and carbon trading as compliance tools.